State-Run Health Insurance Plans Gain Support

WASHINGTON -- Some influential centrist Democrats in the Senate are warming to a compromise that envisions health-insurance plans run by state governments, and California Gov. Arnold Schwarzenegger added his voice Tuesday to a small group of Republicans expressing support for a Democratic-led overhaul plan.

Liberals have challenged legislation nearing a vote in the Senate Finance Committee because it doesn't allow for a plan run by the federal government, which they view as key to expanding insurance coverage to tens of millions of Americans. Instead, the bill would create a network of nonprofit health cooperatives, seeded with $6 billion of federal money, to compete with private insurers in a bid to contain prices.

A new proposal by Sen. Tom Carper would spell out how to boost competition in the private market by enacting government-run plans at the state level. States could act alone or in concert with others to gain more leverage in the marketplace, and would be bound by the same rules established for private companies using the national insurance exchange envisioned by the Senate Finance bill. Another option would entail states opening their workers' employee-benefit plans to the general public.

The Delaware Democrat's plan won praise from some in his party Tuesday as a way of bridging differences among them.

"Conceptually, having the states take responsibility makes a great deal of sense," said Nebraska Sen. Ben Nelson, a key voice for moderate Democrats. "It is important that we really take a close look at this." He noted that states are already in the health-insurance business because they administer Medicaid and other federal-state programs.

Nelson said state health plans could compete alongside the nonprofit cooperatives. Another Democratic centrist, Sen. Kent Conrad of North Dakota, said the Carper proposal was "very constructive."